Dairy Woes Restrain California Alfalfa Prices, For Now

Slumping fortunes in the state dairy industry will likely put downward pressure on California alfalfa prices early in the 2012 growing season, says Norman Beach, vice president of San Joaquin Valley Hay Growers Association in Tracy. As the season progresses, though, he looks for supply to tighten and prices to improve.

As of mid-April, many San Joaquin growers had wrapped up their first-crop harvest. A stretch of rainy weather, though, kept many northern-valley producers out of their hayfields. “We’re kind of in a holding pattern,” says Beach. “Typically, we get started on first cutting around the first week of April.”

To date, Beach reports that first-cutting, dairy-quality alfalfa hay in the region has been selling for around $270/ton at the stack. A year ago, the price was closer to $300/ton. “The difference is due 100% to milk price,” he says. “We’re down a little bit on acres, so the hay price should be stronger. But the money’s just not there for the dairy producers. It's shaping up as a year where staying on top of collections could be crucial for hay growers.”

Also troublesome, says Beach, is that tightening margins have led some dairy producers to dramatically cut back on the amount of hay they’re feeding in rations. “We’ve heard plenty of stories about dairy producers who used to feed 12-15 lbs of hay who are now feeding just 4 lbs. And some have cut it out completely.”

Even so, he expects overall demand to remain solid long term. “There are still plenty of people looking for hay. As buyers realize that there’s just not as much product out there as they think there is, we’ll see prices start to move up through the fall months.”

The challenge for alfalfa growers will be to determine when to put product on the market. “If you want to get the best price for your hay, you’re probably going to have to sit on it for awhile. If you want to move your hay in a hurry, the buyer is going to be in the driver’s seat.”